Smaller ambulatory surgery centers reported higher net income per case than larger facilities, in spite of larger facilities' greater cost efficiencies, according to a study by the Medical Group Management Association. Surgery centers with fewer than 3,000 cases per year had a mean net income of $473.02 per case in 2004, compared with larger centers' mean net income of $341.32, a 27.8% difference. The difference may reflect higher utilization of operating rooms and perhaps more profitable procedures at smaller centers, particularly single-specialty facilities, says David Schlactus, chief executive officer at Willamette Surgery Center, Salem, Ore. Surgery centers that performed at least 5,000 cases annually paid less for medical and surgical supplies, $185 per case, compared with $228 per case at centers handling fewer than 2,000 procedures annually. The MGMA report, prepared with the American Association of Ambulatory Surgery Centers, was based on responses from 166 surgery centers nationwide.
IPAs lose one, win one
The Federal Trade Commission affirmed a 2004 ruling from an FTC administrative law judge that found an independent practice association had illegally fixed prices in the Dallas-Fort Worth market. North Texas Specialty Physicians, Fort Worth, says it will appeal the commission's ruling to the 5th U.S. Circuit Court of Appeals. The FTC commissioners banned 480-physician North Texas from contracting with payers on behalf of members except in the case of qualified risk-sharing and clinically integrated arrangements. North Texas says it believes its appeal was supported by a recent arbitration decision in an antitrust case between Advocate Health Care, Oak Brook, Ill., and insurer UnitedHealthcare of Illinois. The arbitration panel dismissed all claims against Advocate and its IPA.
Groups agree to partnership
Two San Francisco-based medical groups with close ties to Sutter Health's California Pacific Medical Center agreed to renegotiate the terms of their partnership in a move that forestalls an imminent breakup. Sutter-affiliated Physician Foundation, an 80-doctor specialty group, and Brown & Toland Medical Group, an independent practice association representing about 1,500 doctors, reached a temporary compromise that extends their "binding letter of agreement" until May 15 while they hammer out a new long-term agreement. Physician Foundation has subcontracted its HMO business to Brown & Toland since 1996. But the groups have been feuding for much of the past year over the foundation's direct pursuit of HMO contracts and recruitment of local specialty physicians, which have allegedly increased competition between the two. A split-up would complicate Sutter's ongoing push to create a network of affiliated physician groups in the San Francisco area in order to grab business from Kaiser Permanente and other competitors.
Docs say hospital not playing fair
A physician group in Iowa sued a not-for-profit Waterloo hospital, alleging the hospital, its chief executive and Catholic parent company conspired to compete unfairly, violate state trademark laws and drive the physicians out of business. Cedar Valley Medical Specialists, a 53-physician multispecialty practice, filed a lawsuit in Black Hawk County (Iowa) District Court against 281-bed Covenant Medical Center, part of three-hospital Covenant Health System; its president and chief executive officer, Jack Dusenberry; and its parent company, 13-hospital Wheaton (Ill.) Franciscan Services. Covenant Vice President of Business Development Chris Hyers declined to comment on the lawsuit, saying the system's policy is to not discuss pending litigation. The 10-year-old physician group alleged that last July, Covenant illegally named its 19-acre planned medical development Greater Cedar Valley Medical Center, infringing on the physician group's trademark, confusing consumers and trading on the physician group's reputation. The physicians allege that Covenant has withheld staff privileges, terminated call coverage and upcoded charges as part of its scheme to drive them out of business.
The taxman cometh to Cleveland
Cleveland Clinic Health System might have to pay $2.8 million in back property taxes, penalties and interest after Ohio Tax Commissioner William Wilkins issued a final determination denying a property tax exemption for a clinic-owned medical office building and surgery center. A Cleveland Clinic spokeswoman says the 12-hospital system will appeal, believing that the facility in Beachwood, Ohio, is an "integral part" of the clinic's not-for-profit mission. Beachwood City School District sued, claiming the property was used for commercial purposes and had historically been classified as taxable. Wilkins sided with the district, distinguishing between tax-exempt owners and tax-exempt use of property. The facility provides very little charity care, Wilkins says, adding that charity care provided at other Cleveland Clinic facilities was not relevant. Several other school districts have also sued over Cleveland Clinic-owned properties.